So you know the franchise you want to buy. You are dreaming of what your life will look like when the business is yours and you can proudly say you own your own business. While this is a great way to create the life you want, the first step of this is to close on the franchise. Unless you have a large sum of money, chances are you will need to finance your pet franchise. Here are a few tips that can help you with the financing process.
Get Your Credit in Order First
Before you even start hunting for a lender, the first thing you should do is make sure your credit is in order. There are many creditors that can give you a profile of your credit as well as sites such as CreditKarma.com. These will allow you to see where your credit currently is as well as ways you can improve upon it. Even though you may be able to get financed with your current credit score, the better you make it, the lower your APR will be. This means the loan will cost you less in the long run.
Be Prepared for a Good Chunk Down
Many lenders will require you to put down 20% for financing your pet franchise. This is pretty standard. Some lenders may not require as much but they will still require some. So make sure you are prepared for this in addition to the money you will need to provide the franchise, keep for your financial needs over the coming months and more. While this may impact the franchise you buy as you can only get so much financing, it is something you need to think about.
Think About the Tax Implications
Some people think they will just get the extra money they need for financing the pet franchise from their retirement accounts. The problem with this is that you may be taxed on it which can take a substantial amount out of this. You may not otherwise receive this tax if you wait until retirement age to take the money from your 401k or IRA. Talk with a financial advisor to find out if this is the most beneficial way to get the extra money you need for starting up your business.
Look at Multiple Sources
You may think that conventional loans are the only option when it comes to financing your pet franchise. While this may be a great option for many people, it simply is not the only option out there. You should also know about the many types of loans. For a franchise ,the SBA may be a good option. However, if your franchise is not on their approved list this gets much trickier. There are other non-conventional ways you can finance the business such as angel investing.